KUALA LUMPUR (Feb 15): Farm's Best Bhd’s proposed asset sales to CAB Cakaran Corp Bhd would help to pare down part of its RM250 million debt, plus save it of an annual interest expense of RM20 million.

In a filing to Bursa Malaysia this evening, Farm’s Best said if the sales of the certain assets were to materialise, the poultry farm’s financials will improve, as part of the RM242 million proceed could be used to reduce its bank borrowings.

The selling price is indeed almost five times the company’s current market capitalisation of RM49.5 million, based on today’s closing of 81 sen.

According to the announcement, the assets that CAB Cakaran is keen to takeover are related to businesses which have either been incurring losses or generating small profits in the last two years. It noted that with the disposals of these assets, the company’s financial position will improve, as the value could be worth more than their total net book value of about RM93 million as at Sept 30, 2015.

“Part of the (cash) proceeds from the disposals can be utilised as working capital for the company’s other existing businesses, such as feedmill and property development and reduce the dependency on bank borrowings,” said Farm’s Best in the announcement.

To recap, CAB Cakaran had on Feb 5 sent separate letters of intents to three of Farm’s Best’s wholly-owned subsidies, Farm’s Best Food Industries Sdn Bhd (FBF), Sinmah Breeders Sdn Bhd and Sinmah Livestocks Sdn Bhd, to buy their assets for an indicative amount of about RM242 million.